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Is Bebo a Bargain, or is Facebook Overpriced?

That's a likely question to come up when one hears the news of AOL paying $850m to buy Bebo with its 40m uses.

However, it's a wrong question.  Facebook and Bebo are not apples to apples.

Bebo is, by all means, a success.  It successfully attacked international markets before Facebook was interested in them and before MySpace focused.  However, at its core, Bebo is a media company.

I have been proposing that social networks have diverged into two paths.  One is the media path.  Led by MySpace (with its Entertainment company DNA), the media approach sees the users of a social network as an audience and is focused on creating and distributing content, usually sourced economically, to that audience.  Others here include Bebo, Netlog, and Friendster.

The other path, with much fewer followers, is the one Facebook leads.  It's the technology path.  (Orkut has the right DNA to play here but Google could not make that happen).  This model goes after the social graph, and the win is an infrastructure win:  Adding an identity layer to the internet.  The stakes are much higher.  The players have to think of themselves as technology companies.  Facebook is a technology company.

That's why the Bebo - Facebook comparison is the wrong one.  Bebo priced its audience at $20-25/user.  I would imagine, MySpace would price its audience around $50/user, getting a market leader premium.  These are still big valuation bets on future monetization of the attention of these users.

Bebo must agree with me on some version of this thinking, otherwise it would not have settled on the audience pricing.

Workaholics: Crush or Flush?

Two days ago I posted about a list Jason created on money saving tips for start-ups.  His #11 is:

Fire people who are not workaholics. don't love their work... come on folks, this is startup life, it's not a game. don't work at a startup if you're not into it--go work at the post office or stabucks if you're not into it you want balance in your life. For realz.

Jason has been getting quite a bit of fire on this particular tip (as he frequently does as a provocative blogger).  I think I understand where Jason's coming from and I think his revisions above gets to the heart of his point more precisely.

In any case, David from 37signals has a great response to the comment about working with workaholics, making one rethink the definition of workaholism.  How much of it has to do with passion, how much of it is brought on by other (usually unhealthy) reasons?

I never thought of myself as a workaholic.  There have been times where I put in large amounts of time to the work at hand, but I have to say, the moment work ceased to be enjoyable, every minute I had to dedicate to it was painful.

Here are David's five reasons to fire workaholics:

1. Workaholics may well say that they enjoy those 14 hour days week after week, but despite their claims, working like that all month, all the time is not going to be sustainable. When the burnout crash comes, and it will, it’ll hit all the harder and according to Murphy at the least convenient time.
2. People who are workaholics are likely to attempt to fix problems by throwing sheer hours at the problem. If you’re dealing with people working with anything creatively that’s a deadbeat way to get great work done.
3. People who always work late makes the people who don’t feel inadequate for merely working reasonable hours. That’ll lead to guilt, misery, and poor morale. Worse, it’ll lead to ass-in-seat mentality where people will “stay late” out of obligation, but not really be productive.
4. If all you do is work, your value judgements are unlikely to be sound. Making good calls on “is it worth it?” is absolutely critical to great work. Missing out on life in general to put more hours in at the office screams “misguided values”.
5. Working with interesting people is more interesting than just working. If all you got going for your life is work, work, work, the good team-gelling lunches are going to be some pretty boring straight shop talk. Yawn. I’d much rather hear more about your whittling project, your last trek, how your garden is doing, or when you’ll get your flight certificate.

Jason Calacanis on Savings at a Start-Up

Jason Calacanis has a great list on some easy tips for start-ups to save costs.  I agree with most of the points.  In fact, we followed basically the same rules at SelectMinds in New York, and at Mondus in Istanbul.  In Istanbul the list varies a bit and it's difficult to cut some corners.

For convenience, here's Jason's full list below.  The post is worth a visit since there are more good tips in the comments.

1. Buy Macintosh computers, save money on an IT department
2. Buy second monitors for everyone, they will save at least 30 minutes a day, which is 100 hours a year... which is at least $2,000 a year.... which is $6,000 over three years. A second monitor cost $300-500 depending on which one you get. That means you're getting 10-20x return on your investment... and you've got a happy team member.
3. Buy everyone lunch four days a week and establish a no-meetings policy. Going out for food or ording in takes at least 20-60 minutes more than walking up to the buffet and eating. If you do meetings over lunch you also save that time. So, 30 minutes a day across say four days a week is two hours a week... which is 100 hours a year. You get the idea.
4. Buy cheap tables and expensive chairs. Tables are a complete rip off. We buy stainless steel restaurant tables that are $100 and $600 Areon chairs. Total cost per workstation? $700. Compare that to buying a $500-$1,500 cube/designer workstation. The chair is the only thing that matters... invest in it.
5. Don't buy a phone system. No one will use it. No one at Mahalo has a desk phone except the admin folks. Everyone else is on IRC, chat, and their cell phone. Everyone has a cell phone, folks would rather get calls on it, and 99% of communication is NOT on the phone. Savings? At least $500 a year per person... 50 people over three years? $75-100k
6. Rent out your extra space. Many folks have extra space in their office. If you rent 5-10 desks for $500 each you can cut your burn $2,500 to $5,000 a month, or $30-60,000 a year. That's big money.
7. Outsource accounting and HR---such a no brainer.
8. Don't buy everyone Microsoft Office--it's too much money. Put Office on three or four common computers and use Google Docs.
9. Use Google hosted email. $50 or free per user.... how can you beat that?!?! Why screw with an exchange server!?!?
10. Buy your hardest working folks computers for home. If you have folks who are willing to work an extra hour a day a week you should get them a computer for home. Once you get to three hours of work a week from home you're at 150 hours a year and that's a no brainer. Invest in equipment *if* the person is a workaholic.
11. Fire people who are not workaholics. don't love their work... come on folks, this is startup life, it's not a game. don't work at a startup if you're not into it--go work at the post office or stabucks if you're not into it you want balance in your life. For realz.
12. Get an expensive, automatic espresso machine at the office. Going to starbucks twice a day cost $4 each time, but more importantly it costs 20 minutes. Buy a $3-5,000 Jura industrial, get the good beans, and supply the coffee room with soy, low fat, etc. 50 people making one trip a day is 20 hours of wasted time for the company, and $150 in coffee costs for the employees. Makes no sense.
13. Stock the fridge with sodas---same drill as above.
14. Allow folks to work off hours. Commuting sucks and is a waste of time for everyone. Let folks start at 6am or 11am and you'll cut their commute in half (at least in LA).
15. Go to each of your vendors every 6-9 months and ask for 10-30% off. If half of them say yes you'll save 5-15% on fixed costs. People will give you a discount if they think they are going to lose the business.
16. Don't waste money on recruiters. Get inside of linkedin and Facebook and start looking for people--it works better anyway.
17. Really think about if you need that $15,000 a month PR firm. Perhaps you can get a PR consultant to work on 2-3 projects a year for $10-15k each and save 75%. More PR firms are wasted half the year while you build up your product anyway.
    ...
18. Outsource to middle America: There are tons of brilliant people living between San Francisco, Los Angeles, and New York who don't live in a $4,000 one bedroom apartment and pay $8 to dry clean a shirt--hire them!